Sugisaki Kiso Co., Ltd v. Hsin Chong Construction Co Ltd and Another
Read the full judgment text of HCCT 13/2017 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 18 June 2017 before Deputy High Court Judge Saunders.
Construction and Arbitration Proceedings — Security for costs — Out‑of‑jurisdiction plaintiff — Defendant’s application under Order 23, rule 1 — Plaintiff resident outside Hong Kong — Whether discretion to order security for costs should be exercised — Prior judgment HCCT 19/2013 with virtually identical facts and defences decided wholly in favour of a similar plaintiff — Defendant’s arguable defence but likely to fail on merits — Court refuses to order security for costs — Plaintiff entitled to costs on application with summary assessment ordered. Sugisaki sued Hsin Chong for unlawful detention and conversion of construction plant and equipment, claiming substantial damages and return of items. The defendants sought security for costs on the ground that Sugisaki is abroad and may be unable to pay costs. The court reviewed principles requiring consideration of defendants’ prospects of success in a broad‑brush manner and examined the prior judgment involving a similarly situated plaintiff (Maruken) which was decided in favor of the plaintiff. The defendants’ three distinctions were not material on the facts and law. The court found Sugisaki had a strong case with a high probability of success, making security for costs unjust. The application was refused, and costs of the application awarded to the plaintiff with a summary assessment directed.
Legal issues: Security for costs against out‑of‑jurisdiction plaintiff
Outcome: Hsin Chong’s application for security for costs is refused
Cites 1 case
|
HCCT 13/2017 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 13 OF 2017 _______
_______
______________ D E C I S I O N ______________ The application 1.The defendants (collectively, “Hsin Chong”) seek an order for security for costs against the plaintiff (“Sugisaki”) in the sum of $4,728,400 pursuant to Order 23, rule 1 of the Rules of the High Court, on the basis that Sugisaki is ordinarily resident out of the jurisdiction. 2.There is no doubt that Sugisaki is resident outside the jurisdiction, and that accordingly there is jurisdiction in the court to order for security for costs: see RHC Order 23, rule 1(a). The issue is whether or not in its discretion, the court should refuse to so order in this case. 3.The principles upon which the discretion is to be exercised a well-known and do not need to be repeated. The principle engaged here is the likelihood of success in this case’s defendants. The principle is set out this way in Hong Kong Civil Procedure 2017, at §23/3/3:
The background 4.In the statement of claim Sugisaki alleges that Hsin Chong has unlawfully detained tools and equipment belonging to Sugisaki at a construction site. Sugisaki claims, amongst other relief, $208,939,756 damages for conversion and an order for the return of the items. Sugisaki acknowledges that it is resident outside Hong Kong, that it does not own any property in Hong Kong, that it does not act as a director of any limited company in Hong Kong and that it does not hold 5% or more shares in any listed company in Hong Kong. 5.In its affidavits in support, Hsin Chong asserts defences to the claim, although at the time the affidavits were made, the defence had not yet been filed. A defence, initially albeit perfunctory and sufficient only to make the submissions made, has now been filed. 6.I am satisfied that Ms Xu correctly describes the defence filed in the following terms: “ The defendants’ case, as pleaded in their respective defences is basically premised upon:-
The HCCT 19/2013 judgment 7.In a judgment given on 12 December 2016, by Mr Recorder Houghton SC, in which a company called Maruken Kougyou Company Limited (“Maruken”)was plaintiff, and Hsin Chong the defendants, a dispute in effectively identical terms was resolved entirely in favour of the plaintiff, Maruken. 8.Hsin Chong asserts that in so far as Sugisaki seeks to rely on a judgment in HCCT 19/2013, that judgment is “of little or no assistance to the present claim”. 9.It is right, that a different plaintiff was involved, and different equipment, but the action was in respect of the same construction site. In that case, like Sugisaki, Maruken was one of the Japanese shareholders of the subcontractor in question, SNE. The factual background to Maruken’s claim was virtually the same as that in Sugisaki’s claim in this case. The timeframe in which the events in the Maruken case took place are virtually the same as the timeframe in the present case. In fact, in the decision, the trial judge alluded to Sugisaki’s role and involvement on numerous occasions. 10.The same defences were raised in the Maruken case as are intended to be raised in the present case. All of those defences proffered by Hsin Chong in that case, set out in §6 above, and pleaded in this case, were rejected. Discussion 11.I am satisfied that the only material difference between the two claims is that Sugisaki had a much larger quantity of plant and equipment detained by Hsin Chong, than Maruken. In all other respects the claim by Sugisaki is effectively identical to that in Maruken. 12.Mr Chan sought to persuade me that there were three crucial distinctions between this case and Maruken. First, he said that in this case Hsin Chong sought to return the equipment to Sugisaki. Second, he said that Sugisaki could have collected the equipment but unreasonably refused to do so. Third, he said that, unlike Maruken, Sugisaki is bound by the terms of subcontracts between Hsin Chong and a subcontractor. 13.I have carefully considered the terms of the defence, and the decision in Maruken. 14.Viewing the matter on a broad-brush basis, I am satisfied that the distinctions relied upon by Mr Chan are distinctions without a difference, and do not detract from Sugisaki’s proposition that the decision in Maruken indicates that Hsin Chong is more likely than not to fail in these proceedings. The result of the Maruken claim was a comprehensive and complete victory for Maruken. Ms Xu says, and I accept, that there is every reason to believe that the same result will be reached in the present action. Mr Chan has been unable to persuade me otherwise. 15.This is, accordingly, a situation in which the case for Sugisaki is genuine and strong, and Sugisaki has demonstrated clearly that it has a high degree of probability of success at trial. 16.I recognise that, in itself, Hsin Chong’s defence constitutes an arguable defence, such that I would be obliged to refuse summary judgment. However, in the circumstances of that defence having failed comprehensively in the Maruken claim, there is a strong case to say that Hsin Chong will fail in its defence to this action. 17.In those circumstances it would not be just to order security for costs against Sugisaki. Disposal 18.I am accordingly satisfied that this is not a case where it would be a proper exercise of the discretion to order that there be security for costs. Hsin Chong’s application for security for costs is refused. Costs 19.Sugisaki is entitled to costs on the application for security for costs. Schedules of costs are to be submitted within seven days, and I shall make a summary assessment of costs, which will be payable forthwith.
Ms Cherry Xu, instructed by Leung & Associates, for the plaintiff Mr Sunny Chan, instructed by Baker Botts, for the defendants | ||||||||||||||||||||
Cases cited in this judgment